On the first day of the New Year of the Tiger, the new forces in China welcomed the opening of the door and "sunbathed" sales, but Faraday Future (hereinafter referred to as FF) in the United States failed to deliver good news.
On the same day, the FF Independent Directors Special Committee, which was established due to the allegations of short-selling agencies, announced the results of the investigation, saying that for FF's first model, FF91, the company had claimed to have received more than 14,000 orders, but the investigation found that there were only a few hundred final payment orders. For a time, the claim about FF order fraud caused heated discussion in the industry. At the same time, the announcement of the survey results has also triggered turmoil in the organizational structure of FF.
FF founder and chief product officer Jia Yueting and FF CEO Carsten Breitfield have not only been cut by 25 percent in salary, but their powers have also been weakened — Susan Swenson, an independent member of the company's board of directors, will assume the newly created executive chairmanship, to which both Bi Fukang and Jia Yueting will report directly.
As of now, FF's market capitalization is $1.375 billion, less than a quarter of the $4.5 billion market value it had at the beginning of the listing.
More than 90% of the order data is false?
For FF, which has been building cars for eight years, in addition to insisting on mass production of "jump tickets", it seems that there are word games that have been repeatedly played from booking volume to order volume.
Fast forward five years, in January 2017, at the CES show, Faraday's first production model, the FF91, was in the limelight for the first time. Just two days later, FF officially announced that less than 36 hours after the release, the number of reservation orders has reached 64124 vehicles, with an average of 30 orders per minute. However, after some media reports said that the official reservation volume is not equal to the order volume, there is no need to pay a deposit and the booking method of repeatedly submitting the order has also made people doubt the authenticity of the data released by FF.
Five years later, a similar plot was played out again. The survey stemmed from questions about FF by U.S. short-selling agency J Capital Research. According to the plan, the mass production version of FF91 will be officially rolled off the production line in July this year. However, in August and September 2021, the agency visited FF's Hanford plant in California three times, but saw no signs of production.
Source: J Capital Research short report
The agency is also eyeing the large order volume mentioned in the prospectus. The report believes that the order volume claimed by FF has a false component, or there is a phenomenon of "left hand to right hand". It said that 78% of the orders in the figures claimed by FF came from the same company, which is likely to be a subsidiary of FF.
In addition, FF's prospectus shows that FF91 still needs $1.4 billion to achieve mass production, but the agency believes that no institution will provide financing and loans for FF. In the 28-page report, J Capital Research bluntly stated that "Faraday's future car can't be sold." For the agency's report, Jia Yueting responded in the circle of friends that "cold rice is hot and fried, nonsense", and said that the short-selling agency is not "the first time it has been punched in the face".
Jia Yueting Circle of Friends Source: Network
But it turns out that it was he who was finally "punched in the face".
According to the 8-K document published by the U.S. Securities and Exchange Commission (SEC), during the review process, the special committee came to the following 4 conclusions:
1. Regarding the business merger between FF and PSAC in July 2021, the statements made by some company employees describing Jia Yueting's role in the company to certain investors were inaccurate, and Jia Yueting's participation in the management of the company after the merger was more important than that represented by some investors.
2. FF stated in its pre-merger statement that it had received more than 14,000 bookings for FF91 vehicles, which could be misleading, as only a few hundred of them had been paid, while the rest (a total of 14,000) had not been paid.
3. Consistent with FF's previous public disclosure of major deficiencies found in its internal controls, FF's internal control over financial accounting and reporting requires upgrading of personnel and systems.
4. FF's corporate culture does not pay sufficient attention to compliance. Among them, the falsification of FF91 order data has once again been confirmed. Although it has been on the road of mass production, the FF91 has been a new car that has been officially unveiled for 5 years, but the FF official has been not stingy to show the market's popularity.
In August 2021, after the launch of 300 limited edition FF 91 Futurist Alliance Editions, the official once again announced that the car, which cost up to 2.8 million yuan, had been snapped up within three days. This investigation has undoubtedly put FF in a crisis of trust again.
However, in the view of FF investor Lin Jianqin, the current investigation does not explain that it is "deception", "it may just be an improper way of presentation, perhaps it did receive more than 14,000 orders, but the certain orders paid for the deposit are hundreds, and other orders have been delayed due to the mass production time." ”
According to the information on the official website of FF, the deposit of the FF91 Futurist Alliance Edition and the FF 91 Futurist model is 5000 US dollars and 1500 US dollars respectively (50,000 yuan and 20,000 yuan in China), and the deposit is indeed fully refundable.
Does FF still have the surname "Jia"?
In this survey, in addition to the number of "anti-counterfeiting" orders, the agency also pointed out that after experiencing the "de-Jia Yueting" FF, the company "underestimated Jia Yueting's participation in the business".
On September 3, 2019, FF founder Jia Yueting announced that he will resign as CEO and become CPUO (Chief Product and User Officer), leading related work related to artificial intelligence, product definition, user acquisition, user experience and user operation.
Bi Fukang assumed the position of Global CEO. The message given by this adjustment is that Jia Yueting will retreat from the front of the stage and focus more on solving the debt problem and clearing the obstacles for FF financing as soon as possible.
However, J Capital Research mentioned in the report that Jia Yueting may still control FF through direct control, holding positions, hiring relatives and so on. Wang Jiawei, who was the vice president of FF's global capital markets at the time, was Jia Yueting's nephew.
According to the FF prospectus, FF has a total of 9 board members, and FF management can appoint 2 directors and nominate 4 directors, plus FF CEO must be a director, so more than half (5) of the board members are appointed or served by FF management.
China Business Daily has reported that Jia Yueting and Wang Jiawei are members of the management. Therefore, although Jia Yueting stepped down as the "number one", more than half of the seats on the FF board of directors were still managed by him.
The results of this survey confirm that Jia Yueting's participation in corporate management after the merger is more important than that represented by some investors. It can be seen that this special committee also listed a series of remedies, most of which are changed by high-level people.
Among them, FF has newly established the position of executive chairman of the board of directors, which is served by Susan Swenson, one of the former board members of FF, and Bi Fukang, the current CEO of FF, and Jia Yueting, CPUO, will report to him, which is seen by industry insiders as Jia Yueting's power cut.
In addition, Brian Krolicki will step down as Chairman of the Board of Directors and Chairman of the Corporate Governance and Nomination Committee of the Board to become a member of the Audit and Compensation Committee of the Board; Jordan Vogel will step down as FF Governance and Nomination Committee as Lead Independent Director; scott Vogel will become Chairman of the Audit Committee, Corporate Governance and Nomination Committee of the Board. Wang Jiawei, vice president of FF's global capital markets, will be suspended without pay.
FF Board Member Source: FF official website
In Lin Jianqin's view, the biggest problem of FF at present is still funds, and domestic financing and factory problems have been affected by the original debt processing progress of Jia Yueting.
After the IPO, FF disclosed financial figures only once in December 2021, and the company expects its net loss to widen significantly to $280 million in the third quarter, compared to a net loss of $33 million in the same period last year.
Due to the delay in mass production, FF has not been able to get rid of losses since its establishment in 2014. FF said that since the company's inception, the company is expected to have a cumulative loss of about $2.8 billion as of September 30, 2021 due to negative cash flow from operating activities.
However, at that time, FF Global CEO Bi Fukang was still optimistic that the company was currently well funded, the Hanford plant was progressing smoothly, and there was enough funds to support the delivery of its first model, FF91, on time in July 2022.
After the review was completed, FF officials also submitted a compliance plan to Nasdaq and will submit the Q3 2021 financial report by the deadline (May 16). But at present, after this round of "anti-counterfeiting", the market's scrutiny of FF will only be more stringent, and there is not much time left for FF.
The source of the header image is | Jia Yueting Weibo
The author | Ding unique
Edit the | Wang Yan